July 31, 2004

e-gold stomps on phishing?

Almost forgotten in the financial world, but e-gold, the innovative digital gold currency issuer based in Florida, USA (and nominally in Nevis, East Caribbean), was one of the biggest early targets for phishing [1]. Because of their hard money policy, stolen e-gold has always been as highly prized by crooks as by its fan base of libertarians and gold enthusiasts [2].

Now it seems that they may have had success in stopping phishing and keylogging attacks; anecdotal reports indicate that their AccSent program has delivered the goods [3]. The company rarely announces anything these days, but the talk among the merchants and exchangers is that there's been relative peace since May. Before that, again anecdotally, losses seemed to be in the "thousands per day" mark, which racks up about a million over a year. Small beer for a major financial institution, but much more serious for e-gold which has on order of $10 million in float [4].

From the feelings of merchants, it seems to have been somewhere between totally successful and stunningly successful. Nobody's prepared to state what proportion has been eliminated, but around 90% success rate is how I'd characterise it. Here's how it works, roughly [5]:

"AccSent monitors account access attempts and issues a one-time PIN challenge to those coming from IP address ranges or browsers that differ from the last authorized account access. The AccSent advantage is that e-gold Users need not take any action - or even understand what an IP address or a phishing attack is - to immediately benefit from this innovative new feature. However, as powerful as AccSent is, the best protection against phishing and other criminal attacks is user education."

If it stomps phishing and keylogging dead for e-gold, is this a universal solution? I don't think so. As welcome as it is, I suspect all this has done is pushed the phishers over to greener pastures - mainstream banks. If every financial institution were to implement this, then the phishers would just get more sophisticated.

But in the meantime, this is a programme well worth emulating as even if it makes it just hard enough to push the victims down the street to the next muggins, that's welcome. This is the equivalent of putting deadlocks on your doors. The point is not to make your house impenetrable, but to make it harder than your neighbour's house.

It's also welcome in that any defence allows the people who have to deal with this get to grips with phishing and keylogging attacks in a concrete manner. Until now, there's been precious little but hot air. Concrete benefits lead to understanding and better benefits. Hot air just leads to balloons.

[1] Earliest report of a phishing attack on the company is 2001.

[2] See the May Scale, the essential Internet moneterists guide showing e-gold at #3.

[3] e-gold's Account Sentinel is described here: http://e-gold.com/accsent.html

[4] Compare this with the guestimates of around a bllion for mainstream phishing losses:

[5] A news snippet here: http://e-gold.com/news.html

Posted by iang at July 31, 2004 12:19 PM | TrackBack